Friday, June 19, 2015

Wolf Pack Activism: A Quick Look at Hedge Fund Activism

The National Law Review wrote a recent article on the highly debated topic of wolf pack activism.

Here are the charts from the article and a link below to read the article in its entirety.

Wolfpack Activism: A Quick Look - chart 1
Chart 1 shows that there were more than 100 13-D filings by activist hedge funds in each of the past 5 years. In this period, activist influence appears to have been on the rise. Not only has the success rate for proxy fights launched by activist hedge funds increased, but activists have also been targeting larger companies.

Wolfpack Activism: A Quick Look - chart 2
Chart 2 shows that, typically, activists take around 10 days after crossing the 5% threshold to file Form 13-D with the SEC. This has remained relatively stable, despite a small dip in 2012. This chart also illustrates that, as of the date of the 13-D filing, the median shareholding by activists has remained relatively constant at approximately 6%.

Wolfpack Activism: A Quick Look - chart 3
Chart 3 sheds some light on activist strategies. In order to gain some insight with respect to wolf packs, we first isolate instances where the abnormal trading volume during the waiting period was more than 10% of the target firm’s shares outstanding. We then distribute 13-D filings across three buckets -- filings that were made within 3 days of crossing the 5% threshold, filings where the waiting period was between 4 and 7 days, and filings that were made 8 or more days after crossing the 5% threshold. The chart shows that there were 8 instances between 2010 and 2014 where the abnormal volume during the waiting period was at least 10% of the target’s shares outstanding and the 13-D filing was made within 3 days of crossing the 5% threshold. As expected, the number of instances where the abnormal trading volume during the waiting period exceeds 10% is greater when one focuses on 13-D filings made 8 or more days after crossing the threshold.

Click here to read the entire article:

The Secret To Jeffrey Smith's Success At Starboard? His Father's Juice Company

A recent Forbes article chronicles activist investor Jeff Smith, of Starboard Value.


You don’t need a Wharton education to be a good investor

Starboard, which also counts Mark Mitchell and Peter Feld as co-founders, prioritizes passion and competitiveness when it hires new employees. “We look for passion, you need to love what you do,” says Smith. He adds, “you need competitiveness, some people miss that.”

“We want people who are really excited about winning; winning meaning that we make money, the stock gooes up and companies perform better. And we want people that are upset if things don’t go as well as it should. If it doesn’t bother you when an investment goes against you then there is a problem,” he says.
Full article found here:

Tuesday, June 9, 2015

Winds of Change - Activism in Japan Article from the Economist Magazine

A recent article on activism in Japan from The Economist magazine was an interesting read.

Quick Excerpt here and link to the full article below:

"Such signals from the apex of the establishment, in a place where business heeds the government more than in perhaps any other big democracy, have not gone unnoticed among corporate leaders. And the government is offering more than gestures. On June 1st its new corporate-governance code came into effect, with the aim of shaking up companies’ slothful boards by, for instance, calling on them to appoint outsiders (many have none at present). This is the first time a Japanese government has laid down detailed rules on how firms should conduct their affairs.
Mr Abe’s attempts to make companies change their ways are one element of Abenomics, his grand plan to restore vim to the Japanese economy. The corporate reforms, along with monetary easing by the Bank of Japan, are the most tangible elements so far of the prime minister’s programme. His government has stood up to pressure from the Keidanren, Japan’s biggest business lobby, which tried its best to get the code watered down."